Benefit Plans

12 Months Ended

Dec. 31, 2020

Retirement Benefits [Abstract]

Benefit Plans

11. BENEFIT PLANS

Pension Plan

All eligible Company employees are included in a non-contributory defined benefit pension plan. Effective April 15, 2008, the plan was “Frozen.” At the freeze date, no employee will be permitted to commence or recommence participation in the plan and no further benefits will accrue to any plan participants. In addition, compensation received on or after the plan freeze date will not be considered for any purpose under the plan.

The following table sets forth the change in benefit obligation, change in plan assets, and a reconciliation of the funded status:

	December 31,
	2020			2019
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	2,422,818		$	2,511,109
Interest cost		89,136			103,829
Actuarial loss (gain)		31,234			(615	)
Benefits paid		(190,563	)		(191,505	)
Projected benefit obligation at end of year		2,352,625			2,422,818
Change in fair value of plan assets:
Fair value of plan assets at beginning of year		2,207,451			2,082,131
Actual return on plan assets		88,410			282,875
Employer contributions		91,861			33,950
Benefits paid		(190,563	)		(191,505	)
Fair value of plan assets at end of year		2,197,159			2,207,451
Funded status of plan included in other liabilities	$	(155,466	)	$	(215,367	)

As of December 31, 2020 and 2019, the components of accumulated other comprehensive loss on a pretax basis are an unrecognized actuarial loss of $1,587,911 and $1,534,166, respectively.

The estimated net actuarial loss for the pension plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost during 2021 is $60,171.

The weighted average assumptions used to determine the Plan’s benefit obligation are as follows:

	December 31,
	2020		2019
Discount rate		4.00%		4.00%
Salary increase rate		N/A		N/A

The components of net periodic plan cost are as follows:

	Year Ended
	December 31,
	2020			2019
Components of net periodic plan cost (credit):
Interest cost	$	89,136		$	103,829
Expected return on assets		(168,391	)		(105,940	)
Amortization of unrecognized loss		57,472			67,402
Net periodic plan cost (credit) included in compensation and benefits expense		(21,783	)		65,291
Changes in benefit obligation recognized in other comprehensive income (loss):
Net loss (gain)		111,217			(177,551	)
Amortization of loss		(57,472	)		(67,402	)
Benefit obligation recognized in other comprehensive income (loss)		53,745			(244,953	)
Total recognized in net periodic plan cost and other comprehensive income (loss)	$	31,962		$	(179,662	)

The weighted average assumptions used to determine net periodic plan cost are as follows:

	Year Ended
	December 31,
	2020		2019
Discount rate		4.00%		4.50%
Expected rate of return on plan assets		8.00%		5.54%
Rate of compensation increase		N/A		N/A
Amortization period		22.48		22.67

Investment Policies and Strategies

Wilmington Trust Retirement & Institutional Services Company acts as Trustee for the Plan. The Plan assets are managed by Pinnacle Associates, Ltd.

The long-term investment objectives are to maintain plan assets at a level that will sufficiently cover long-term obligations and to generate a return on plan assets that will meet or exceed the rate at which long-term obligations will grow. A broadly diversified combination of equity and fixed income portfolios and various risk management techniques are used to help achieve these objectives.

Allowable investments include common stocks, preferred stocks, fixed income securities, depository receipts, money market funds, real estate investment trusts, and publicly traded limited partnerships with the following limitations:

● The account will be a balanced account, with a target of 60% equity securities and 40% fixed income securities ratio which may vary based on the portfolio manager’s discretion.

● The account will generally not invest more than 20% of its net assets in cash and cash equivalents.

● The account will invest, under normal circumstances, between 20% to 60% of its net assets in fixed income securities.

● The account will invest, under normal circumstances, between 30% to 80% of its net assets in equity securities. The equities will be mostly of a large capitalization nature.

● The account will generally hold between 50 to 90 equity securities.

● The maximum equity position size will be limited to 5% of net assets at the time of purchase.

● For equities, each significant economic sector will be considered for the investment.

● The account may invest up to 15% of its net assets in companies incorporated outside of the United States, at the time of purchase.

● The account will not sell securities short. Any short transactions in futures, swaps, structured products, and call options will apply to this limit.

The investment goal is to achieve investment results that will contribute to the proper funding of the pension plan by exceeding the rate of inflation over the long term.

Determination of Long-Term Rate-of-Return

The long-term rate-of-return-on-assets assumption was set based on historical returns earned by equities and fixed income securities, adjusted to reflect expectations of future returns as applied to the plan’s target allocation of asset classes. Equities and fixed income securities were assumed to earn real rates of return in the ranges of 5-9% and 2-6%, respectively. The long-term inflation rate was estimated to be 3%. When these overall return expectations are applied to the plan’s target allocation, the result is an expected rate of return of 7% to 10%.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future services, as appropriate, are expected to be paid:

Fiscal year ending
December 31,
2021		190,563
2022		191,307
2023		185,630
2024		179,742
2025		173,477
Years 2026-2030		774,101
	$	1,694,820

The Company expects to contribute cash of $94,000 to the plan in 2021.

The fair values of the Association’s pension plan assets at December 31, 2020, by asset category (see note 15 for the definition of levels) are as follows:

			Quoted Prices
			in Active
			Markets for		Significant		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
Asset Category	Total		(Level 1)		(Level 2)		(Level 3)
Cash and money market funds	$	807,635	$	807,635	$	-	$	-
Corporate bonds (a)		470,564		-		470,564		-
Equity securities (b)		918,960		918,960		-		-
Total	$	2,197,159	$	1,726,595	$	470,564	$	-

(a)	Includes seven corporate bonds due within five years rated BBB+ or better by the S&P.
(b)	Includes 34 companies spread over various market sectors.

The fair values of the pension plan assets at December 31, 2019 by asset category (see note 14 for the definition of levels) are as follows:

			Quoted Prices
			in Active
			Markets for		Significant		Significant
			Identical		Observable		Unobservable
			Assets		Inputs		Inputs
Asset Category	Total		(Level 1)		(Level 2)		(Level 3)
Cash and money market funds	$	461,012	$	461,012	$	-	$	-
US Treasuries		397,977		397,977		-		-
Corporate bonds (a)		531,783		-		531,783		-
Equity securities (b)		816,679		816,679		-		-
Total	$	2,207,451	$	1,675,668	$	531,783	$	-

(a)	Includes eight corporate bonds due within ten years rated BBB+ or better by the S&P.
(b)	Includes 26 companies spread over various market sectors.

Employee Savings Plan

The Company also maintains a defined contribution plan for eligible employees under Section 401(k) of the Internal Revenue Service (“IRS”) Code. All employees who meet the plan eligibility requirements may elect to participate in the plan by making contributions up to the maximum permissible IRS limit. The Company makes matching contributions limited to 50% of the participant’s contributions up to 6% of compensation. Savings plan expense was approximately $21,000 and $19,000 for the years ended December 31, 2020 and 2019, respectively.

Employee Stock Ownership Plan

Effective upon completion of the Company’s initial public offering in July 2013, the Association established an Employee Stock Ownership Plan (“ESOP”) for all eligible employees who complete a twelve-month period of employment with the Association, have attained the age of 21 and complete at least 1,000 hours of service in a plan year. The ESOP used $555,450 in proceeds from a term loan obtained from the Company to purchase 55,545 shares of Company common stock. The remaining term loan principal is payable over 25 equal annual installments through December 31, 2037. The interest rate on the term loan is the prime rate. Each year, the Association intends to make discretionary contributions to the ESOP, which will be equal to principal and interest payments required on the term loan. The Association may substitute dividends paid, if any, on the Company common stock held by the ESOP for discretionary contributions.

Shares purchased with the loan proceeds provide collateral for the term loan and are held in a suspense account for future allocations among participants. Contributions to the ESOP and shares released from the suspense account are to be allocated among the participants on the basis of compensation, as described by the ESOP, in the year of allocation.

ESOP shares pledged as collateral were initially recorded as unearned ESOP shares in the consolidated statements of financial condition. Thereafter, on a monthly basis, compensation expense is recorded equal to the number of shares committed to be released times the monthly average market price of the shares, and the committed shares become outstanding for basic net income per common share computations. ESOP compensation expense was approximately $24,000 and $32,000 for the years ended December 31, 2020 and 2019, respectively.

The ESOP shares were as follows:

	December 31,
	2020		2019
Allocated shares		14,765		12,520
Shares committed to be released		2,362		2,245
Unearned shares		37,935		40,297
Total ESOP shares		55,062		55,062

Equity Incentive Plan

On July 17, 2014, the Board of Directors adopted the Sunnyside Bancorp, Inc. 2014 Equity Incentive Plan (the “Stock Incentive Plan”) which was approved by shareholders at the Company’s 2014 Annual Meeting of Shareholders held on September 16, 2014. Stock options and restricted stock may be granted to directors, officers and other employees of the Company. The maximum number of shares which may be issued upon exercise of the options under the plan cannot exceed 79,350 shares. The maximum number of shares of stock that may be issued as restricted stock awards cannot exceed 23,805.

On June 16, 2015, the Company granted 10,500 shares of restricted stock to certain executive officers, with a grant date fair value of $10.50 per share. Twenty percent of the shares awarded vest annually. Management recognizes expense for the fair value of those awards on a straight line basis over the requisite service period. Plan expense was approximately $11,000 and $22,000 for the years ended December 31, 2020 and 2019, respectively. During the years ended December 31, 2020 and December 31, 2019, 1,050 and 2,100 shares of restricted stock vested, respectively. There were no non-vested restricted stock awards outstanding at December 31, 2020. There were no stock options outstanding as of December 31, 2020.

Other Retirement Benefits

Effective June 2002, the Company entered into salary continuation agreements with certain of its officers. The agreements provide for specified benefit payments for life, 15-year period certain commencing at normal retirement, as well as payments upon early retirement, disability and death. The amounts payable under the agreements vest at an annual rate of 5% over 20 years and are computed as a specified percentage of a defined total compensation base, less (i) benefits under the Company’s pension plan, 401(k) plan and deferred compensation agreements, and (ii) a portion of social security benefits. The Association also entered into agreements providing for split-dollar life insurance death benefits based on each officer’s total compensation, as defined. The salary continuation and split-dollar agreements are unfunded, non-qualified benefits plans. However, the Company has purchased life insurance policies held by a Rabbi Trust in consideration of its obligations under the salary continuation agreements and certain prior deferred compensation agreements. During 2009, certain of these obligations were renegotiated by the Company with the purchase of annuity contracts. At December 31, 2020 and 2019, recorded obligations of $206,069 and $224,562, respectively, are included in other liabilities with respect to these agreements. The related life insurance policies are reported as assets at their cash surrender values of $2,438,576 and $2,381,554 at December 31, 2020 and 2019, respectively. Total expense under these plans was approximately $(3,900) and $(1,500) for the years ended December 31, 2020 and 2019, respectively.